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Eden Shochat

Partner at Aleph VC

THIS CHAT HAPPENED ON November 06, 2015

Discussion

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Eden Shochat@eden_shochat
I am a venture capitalist who likes to build stuff. most recently Karma, the largest network for Israeli entrepreneurs, Aleph, $150MM venture capital fund; The Junction, the first accelerator in Israel; face.com, a massive face recognition API acquired by Facebook; Aternity, the leading user-centric enterprise IT platform and GeekCon, Europe’s biggest makers conference. Aleph has invested in Windward, Meerkat, WeWork, and Honeybook among others. Rethinking venture operating models, building frameworks to getting things done, machine learning and productivity are some of my passions.
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Harry Stebbings@harrystebbings · Podcast Host @ The Twenty Minute VC
Hi @eden thanks so much for joining us today. Would love to hear how you have established the brand of Aleph as the VC in Israel defined as 'smart money'? What is your personal branding strategy looking like these days?
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Eden Shochat@eden_shochat
@harrystebbings when michael (ex benchmark) and i started thinking about aleph, we started writing bullets that ended up being our 'Why the best Israeli entrepreneurs will choose to go big with Aleph” slide on our capital raise deck. copying & pasting the bullets: Fast decision making , Rapid talent acquisition , Local support to go all the way , Entrepreneur friendly , Willingness to roll up the sleeves , International network .
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Eden Shochat@eden_shochat
@harrystebbings we have since been giving a lot of thought how to run the fund to fit that. our “welcome aboard” doc for new people joining aleph outlines a few principles: Service the hell out of entrepreneurs, “Different Is Better Than Better”, Aleph is a Transparent Enterprise, We each own our actions, It’s easier to ask for forgiveness than permission. the hope behind it is to sustain this culture not from the top but rather in every single person.
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Eden Shochat@eden_shochat
@harrystebbings one thing that we didn’t plan on, but have realized the importance of is Aleph being a strong reference for follow on funders as a key differentiator in winning deals. by both establishing the relationships as well as actually showing that given an A round by us, there is a high likelihood of a smart B investors, we created a strong differentiator for the fund.
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Eden Shochat@eden_shochat
@harrystebbings as far as personal brand, the only key guiding principle is providing value to the eco-system, and though that be top of mind for people building companies.
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Avigail Levine@avigaillevine
What is the hardest part of being a VC investor
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Eden Shochat@eden_shochat
@avigaillevine most say it's the many "no" that VCs give. it never gets too easy but if you strive to provide honest feedback, it dulls that pain. the bigger issue, IMHO, is the need to get into every meeting as if "it's the one". it's so easy to become sarcastic or too strong of a pattern matcher, and that will make you sloppy and miss the spark that you should be seeing.
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Lejla Bajgoric@lejlahunts · Intern, Product Hunt
Hi Eden! What were you goals with a conference as massive as GeekCon when you came up with the idea, and how has that evolved over the years? Any cool, unexpected stories or outcomes?
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Eden Shochat@eden_shochat
@lejlahunts the very first geekcon, 11 years ago was simply a way for a group of a few friends to get away for the weekend to meet up and build things. it ended up hosting 80 makers doing talks, brainstorms and hacking projects together. that last one (hacking projects) was so much fun that it drove a tagline: “No Project = No Entry”, which is still with us to date. this was the driver for an even more important principle - we don’t care about your pedigree, for better or worse.
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Eden Shochat@eden_shochat
@lejlahunts if you look at recent geekcons, the same concept still stands, but the event turned from a 36 hour event to a 3 days one, which allows for far bigger creations by a much more diverse crowd. our target KPI is 66% failed projects, which we haven’t been very good at in recent geekcons. too much success = not enough daring. on there other hand, the first geekcon had 6 women, and the last one had >20%. still ways to go, but we are getting there.
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Eden Shochat@eden_shochat
@lejlahunts the current goal for geekcon is getting people to team up and get to know like minded people. since projects MUST BE USELESS, there is no judging creating an atmosphere of collaboration and super creativity. many teams ended up deciding they want to do something together in-real-life, which is pretty cool. check out http://geekcon.org - it’s become a very international event. we are now doing off-shot events like Geekcon Kids (single day event, geared for future geeks), Geekcon Med (medical staff + makers), Geekcon Art (artists + makers) and Geekcon Pets.
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Yael Elad@yael_elad · CFO
@eden If you were to start a new company today, what kind of a product it would be?
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Eden Shochat@eden_shochat
@yael_elad probably a new search engine. that market is so not figured out yet. we have 7B people on earth, with so much knowledge, and such a little part of it structured in any searchable way. i’d compare it to intent-based marketing (google) and implicit-based (facebook). everyone thought that google figured out the best monetization model in the world, but facebook proves again and again that people don’t always actively seek what they want. same with searching for knowledge - there is so much “dark matter”.
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Zvi@nivertech
@eden about a year ago Aleph VC warned Israeli entrepreneurs that adtech is not for them [1]. Can you please give examples of the industries where Israeli entrepreneurs should focus? [1] A Call to Israeli Engineers! Adtech Is Not For You. http://aleph.vc/a-call-to-israel...
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Eden Shochat@eden_shochat
@nivertech michael, my partner, indeed warned of this issue over a year ago, at a time when it was not a mainstream observation. in the defense of adtech, much of the business of the internet is moving people from lesser value status to higher worth. the key objection we still have is that most of adtech companies are doing a “mid of value chain arbitrage”, meaning they don’t own any relationship and so can be replaced at any point in time for someone with better performance or lesser cost.
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Eden Shochat@eden_shochat
@nivertech IMHO, local geos eco-systems should focus on their points of strength. israel has strong machine learning talent (mobileye, face.com are two examples) and cyber (though scaling the sales of cyber software is still challenging) are two obvious examples. but i’d urge israeli and other non-valley entrepreneurs to look at old industries that can be re-invented using data and modern UX. it’s unlikely for windward (tracking all ships at sea, originally finding the iranian bad guys, but now predicting financial flows) to have been born in the valley. similarly, freightOS that are empowering freight forwarders ($1.4T/y industry) to respond immediately to quote proposals. these are hugely important, under served, markets.
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Emily Hodgins@ems_hodge · Operations @ Product Hunt
Hey Eden! Thanks for being here today. 🙌During your career to date, what has been your a) most challenging moment and how did you overcome it? b) proudest moment and why? c) most surprising moment?
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Eden Shochat@eden_shochat
@ems_hodge there have been a bunch of challenging moments. i guess the two that immediately come to mind are - understanding, 6 years after starting Shells (my first company) and a good number of USD millions raised, that real-time 3D was ways off. my estimate was a year or two, but that was 15 years ago and it’s still pretty challenging to build 3d models. it was hard to see at the time, because we had all this anecdotal data that things are looking better and will change. luckily, 2001/2002 came, and helped deciding that i should move on. it was such a terrible feeling, followed by such a relief. i still remember every moment of those very bad few weeks. one other tough moment was between the signing the the face.com acquisition by facebook to its closing, when we were sued by a patent troll. this would have been the 3rd time the deal fell through. i found wonderful partners at facebook, and 19 months later we got the lawsuit dismissed, but this was the kind of challenging moment that turned into spending 3 hours a day on an issue that could have significant financial implications for a group of people that very much trusted us.
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Eden Shochat@eden_shochat
@ems_hodge proudest moment. only tangentially related to career but the first thing that came to mind was a dialogue with my eldest when he was 3 - “ofek, you need to get a shower”, “dad, i have an idea, i’ll first play with the iPad and then go to the shower”, “ofek, i have a better idea - first grab a shower and then play with the iPad”, “dad, that’s not smart. fill the tub and when you are ready, i’ll pause”. i’m still surprised every time by the lack of predictability of the outcome of startups. the number of times i saw where the team that was in a “least likely to succeed” status broke out and kicked ass is humbling.
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Jonathan Arad@jonathanarad
Can you recognize any trends in Israeli VC scene? Where will Aleph be in 5 years?
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Eden Shochat@eden_shochat
@jonathanarad there is one that's pretty clearly happening. the industry was born 1995 via the government yozma program, which anchored funds that brought in foreign GPs that would teach the locals the ropes. so downside was capped. the government gave the managers an option to buy the government out, so upside was not capped. smart. we are now 20 years after. performance of companies is strong, and the foreign funds that came in have learned that flying in isn't a great strategy for A rounds. the problem is, the industry failed to create succession plan for partners, so you are seeing a tectonic shift where new funds are formed, either by new managers or by junior partners spinning out of existing funds. change is good. aleph is part of this new shift. it allows us to rethink the values we wanted to bring to the industry. we also modeled the fund as an equal partnership and partner only firm. this creates many constraints on us, which in turn (i believe) drive innovation. by forcing ourselves to a small team, we resorted to thinking a lot about breadth vs. depth of our actions and writing software to "beat" these limitations. 5 years from now is a short while in VC life. the key for how we think is how we "instrument" the eco system so we have access to the right deals. our focus is and will continue to be seeing what exciting companies didn't we know of, and why.
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Jacqueline von Tesmar@jacqvon · Community at Product Hunt ⚡️
What's something you used to fervently believe that you now see as misguided?
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Eden Shochat@eden_shochat
@jacqvon wow. what a great question. i believed in the success of better solutions. i've since transitioned to understanding that "different is better than better". very rarely will "uber for cancer medicine" work, because you start off by defining you/the problem as a subset of another. by creating something that is different, you control the message, and by controlling the message, you stand a chance to get above the noise.
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Avigail Levine@avigaillevine
@eden How is investing in Israel different from investing in the US, if at all?
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Eden Shochat@eden_shochat
@avigaillevine on the demand side, lower signal to noise ratio (a lot of companies with solution looking for a problem, or marginally improved product - mostly on the b2c side), but far (!) stronger signal with the good companies. supply side wise there is far less local money than the valley (comparable to NY) on the seed and A stage. B and beyond are well handled by foreign funds.
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JJ@outdreamer · Web Developer/Writer/Idea-generator
@eden Ideally we'd have functions to describe tools like frameworks, like (framework A = feature x + design pattern MVC + ... ) so that we can input functions as data into analytical programs & locate the best framework structure before building it. This would require an environment that is not built piecemeal by open source contributors but one in which a committee is formed to oversee the articulation of that function-analyzing program. Do you think the IT industry will ever form committees to achieve more intelligent tool & program & language design before those tools are built, or will we always be improving superficially while not addressing core problems with our tool design?
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Eden Shochat@eden_shochat
@outdreamer if i understand your Q correctly, then i think there isn't much of a chance of that happening. engineering & development is much more art than science. for standards to evolve there need to be concrete definitions of problems and repeat solutions. i think the better chance is for new search (human directed or computers based) to be developed in order to find and leverage existing solutions, not dependent on committees. just my 2c.
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JJ@outdreamer · Web Developer/Writer/Idea-generator
@eden @outdreamer What do you think of a site where people can submit problem types they've identified & submit associated solution types & success rates for those solution types, with a recommendation algorithm to suggest solutions based on data?
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JJ@outdreamer · Web Developer/Writer/Idea-generator
@eden @outdreamer My initial question was basically just an equivocal way of asking if you think we'll ever develop an algorithm to design optimal software - do you think that's in the cards?
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Eden Shochat@eden_shochat
@outdreamer there is a company that worked on that, indexing all of github to find a solution to a product manager defined problem - input --> output. the base assumption there was that most code in the world was already written. interesting approach. they ended up pivoting to more of a data science direction. i think it was the right thing for them, but there is definitely an opportunity there.
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JJ@outdreamer · Web Developer/Writer/Idea-generator
Do you see social networks becoming consolidated over time, so that everyone is networking on existing platforms like Facebook, or do you think targeted social networks will be built based on specific audiences the network would appeal to, or purposes/topics in mind for discussion on the platform?
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Eden Shochat@eden_shochat
@outdreamer it's two separate questions: do there need to be multiple graphs, and what is the front end of that graph. there *can* be one graph to rule them all, but the facebook graph isn't it. it's too noisy & dirty. as far as front-end, it's a question of attention. people spend too much time in front of existing social networks for there to be another one. there needs to be a very unique and different use case for another social network to emerge.
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JJ@outdreamer · Web Developer/Writer/Idea-generator
@eden @outdreamer Some examples Im thinking of would be networks built for inclusive groups with privacy concerns, like lawyers or those in public offices, or social networks with a specific purpose in mind, like identifying problem types, voting on policies & products/services they want to be created, and so on. I think the larger social networks would like for these discussions to take place on their servers for data acquisition but sometimes a more effective & passionate team would provide better management. Then there are communication-improving tools like Slack that decrease the transaction cost of communication. My concern is that powerful tools & specific social networks with valuable like as mentioned above will get acquired by larger networks rather than maintaining independence. So in a war situation, if something like Facebook & ISPs pick the same side, there won't be sufficient resources to subvert them. Monopoly of a platform is unlikely but still something we need to anticipate so preparations can be made to avoid it.
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Eden Shochat@eden_shochat
@outdreamer a well designed graph should be able to handle privacy. that was the opportunity for google+ - the facebook graph isn't perceived as private. the family & friends use case is super strong but google opted towards competing directly with FB. i agree with you about the risk of consolidated graph. sadly, the world doesn't look at that as a downside. federated identity and graph is a better solution but unlikely to happen because it's even marginally harder to maintain.
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Ilan Atias@ilanatias
@eden Deep learning technology is now available with high performance, how do you think is going affect the products we use? What new products / startup ideas people should work on?
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Eden Shochat@eden_shochat
@ilanatias the impact of DL is pretty awesome. just seeing the advances that yaniv taigman - my partner at face.com - has done with our face rec algorithms at facebook is incredible. i'm still fairly bullish on humans for the bulk of the work, and am looking at DL for: 1. improving margins - humans aren't very expensive if you use the global workforce, but they are still more expensive than compute, 2. high scale. there are things, like face recognition, video analysis, going through 100M/1B tick data that humans just can't do in a timely manner. so my bet right now would be on generating tagged data sets. what facebook is doing with M seems to be very smart in that regard. same goes for companies that are monitoring the health of machines - they are using humans to jump start their data sets. but if you are an entrepreneur that has a labeled data set, like zebra medical that has a labeled radiology database, we should definitely talk. deep learning (& other machine learning techniques) can transform industries with labeled data sets.
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Eden Shochat@eden_shochat
THANK YOU for hosting me! i’ve been a product hunt fan for a long while, even before experiencing its (very unexpected, at the time) power during the meerkat launch, and subsequently for joytunes. very happy to have been invited to this AMA session. you can always reach me at @eden on twitter.
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Emily Hodgins@ems_hodge · Operations @ Product Hunt
@eden THANK YOU for joining us :) We've loved hosting you and thank you so much for taking the time to answer all of our varied questions 👍😘